Increased Cost Estimates Could Cause Laguna Honda Construction To Be Scaled Back
San Francisco officials last week adjusted a proposal on the renovation of city-owned Laguna Honda Hospital to include three new buildings and 780 additional beds for $483 million, compared with the original $400 million proposal that included four new buildings with 1,200 skilled-nursing beds, the San Francisco Chronicle reports. If officials aim to stay within the original budget proposal, renovation could be limited to 540 new beds.
The revised proposal came after a second round of bidding for constriction on the renovation of the facility (Matier/Ross, San Francisco Chronicle, 3/14).
The city proposed upgrading its oldest nursing home and rehabilitation center to comply with state seismic requirements. In 1999, 73% of voters approved a $299 million bond measure to fund construction of the new facility.
The proposed 1,200-bed facility originally was estimated to cost $401 million, but project manager Michael Lane in June 2004 told the city's Health Commission the price could eventually increase by $30 million to $40 million (California Healthline, 6/8/04).
San Francisco also approved an additional $100 million in tobacco industry settlement funds to cover increasing cost estimates.
Preliminary construction on the project began in November 2002, and the first building was expected to be opened by 2007. That date has since been postponed.
Lane attributed the cost increases to a 60% increase in the price of structural steel, rising concrete costs and labor expenses and a statewide increase in hospital construction projects that has decreased competition among contractors.
Mayor Gavin Newsom (D) on Friday called the increased cost estimates "unbelievable." He said, "At first I thought this was some kind of early April Fool's joke. Early on, they said we might only get 900 beds, then they said 800 -- but never did I think we'd wind up losing 650 beds." He added, "I said all along that we'd get into trouble by rushing into this. I don't want to say, 'I told you so' -- but I did."
Newsom noted that the revised estimates come as the city is considering a bond proposal to update General Hospital. Newsom said he has asked San Francisco controller Ed Harrington "to bring together a group of financial minds to try to figure this out."
Harrington confirmed that the mayor contacted him, but Harrington said he has not yet examined the issue (San Francisco Chronicle, 3/14).